Housing Day, the tourism industry and subsidies

This week marked 10 years since the San Diego City Council initiated a number of bold actions to address the housing crisis then facing the city. The mayor and council members declared a “Housing State of Emergency,” adopted an Inclusionary Housing Ordinance, agreed to issue up to $55 million in bonds to be repaid with redevelopment funds and established a task force to develop other proposals for affordable housing, including new financing sources for the Housing Trust Fund.

The inclusionary housing program generated $46 million in fees, contributing to the construction of almost 1,500 affordable apartments for San Diego’s low-income families and individuals. The $55 million from bonds generated an additional 722 new affordable-housing units. The task force was empaneled and produced a set of excellent recommendations to meet future housing needs.

Ten years later, however, that sense of urgency seems to have passed. The recommendations of the Housing Task Force have been largely ignored and the proposal to update the linkage fee for commercial development has stalled in City Hall, even though San Diego has become the most unaffordable city for low-income renters among 50 comparable cities. According to a study commissioned by the Housing Commission in 2010, 55 percent of renters in our city spend more than 30 percent of their income on rent and utilities – and rents continue to escalate. To make things worse, the demise of redevelopment agencies eliminated what was probably the largest and most consistent state and local source of funding for affordable housing.

Obviously, the city should do more and exploit creative opportunities for public-private partnerships.

Consider this: According to the San Diego Association of Governments, almost one-quarter of the jobs to be created in the future will be in the hospitality and retail sectors, which pay notoriously low wages, making it impossible for workers in those sectors to afford market-rate housing. This looming renters’ crisis is being ignored by the City Council and mayor, even though a golden opportunity exists to generate funds for affordable housing: the creation of the city’s Tourism Marketing District. As currently proposed, 2 percent of gross room revenues – approximately $30 million per year – would flow from hotels to tourism industry organizations like the San Diego Convention & Visitors Bureau to market the city.

I am not going to discuss the merits of a proposal to give what is essentially public money to a private industry. But I have to express my surprise that the city is not tying this huge subsidy to address critical housing needs of hospitality industry workers. This is an industry that pays most of its workers rock-bottom wages and actively contributes to reduced economic prosperity and a lower standard of living, forcing many working families to rely on taxpayer-funded social services to survive. Many tourism workers pay large portions of their paycheck for housing, foregoing or reducing other necessities such as health care, education and food.

What should the City Council do?

It needs to negotiate with the hotel industry to refinance the Housing Trust Fund by reinstating a portion of the annual increment to the Transit Occupancy Tax that was eliminated in 1993 or, more significantly, adding one-half of 1 percent to the existing hotel tax.

In negotiating with the tourism industry, the mayor and council should act in good faith to balance the needs of the public with those of private industry and demand a good deal in return for $30 million a year.

Calavita is professor emeritus in the Graduate Program in City Planning at San Diego State University and author of “Inclusionary Housing in International Perspective: Affordable Housing, Social Inclusion and Land Value Recapture.” He can be reached at ncalavit@mail.sdu.edu